Sales of Solid-State Drives Account for Less Than 2% of Western Digital’s Sales

Even though sales of solid-state drives (SSDs) and multimedia products are growing rapidly for Western Digital Corp., they both combined account for less than 2% of the company’s quarter revenue, according to the latest financial results of the world’s second largest maker of hard disk drives (HDDs). However, the company hopes to address broader markets and earn higher revenues with SSDs when it introduces new products for enterprise markets in the future.

“The combination of media players and solid state drives taken together are the fastest growing component of our business and they’re both growing and we anticipate they will both continue to grow,” said John Coyne, chief executive officer of WD, during the most recent conference call with financial analysts.

Western Digital on Thursday reported revenue of $2.6 billion, hard drive shipments of 49.5 million units and net income of $429 million, or $1.85 per share, for its second fiscal quarter ended January 1, 2010. In the year-ago quarter, the company reported revenue of $1.8 billion, hard drive shipments of 35.5 million units, and net income of $14 million (the year-ago net income included $113 million of restructuring charges). Average hard drive selling price was approximately $52.00 per unit, up $1from the year ago quarter and up $3.00 from the September quarter.

According to Timothy Leydon, chief financial officer of WD, non-hard drive revenue, including sales of WD TV HD media sets and solid-state drives, totaled approximately $47 million compared to $12 million in the prior year and $36 million in the September quarter. Clearly, WD TV HD as well as own-brand SSD product lines are growing fast.

At present Western Digital ships SSDs designed for embedded systems, media appliance and data streaming markets. The company remains tight-lipped over solid-state drives for consumers, but claims that in 2011 it will address broader enterprise markets with offerings that include SSDs with Serial Attached SCSI (SAS) interface and other improvements.

“We expect to have an enterprise ready solid-state product line offering in 2011 and so we will continue to expand the current drive base of 2.5” 10K SAS, continue to expand that product line over the course of this year and follow up with an extension to the product line with higher performance products in 2011,” the chief executive of WD told the analysts.

The company has no plans to enter the market of HDDs with 15K rpm spindle speed and intends to address the ultra high-performance segment with solid-state offerings. Nevertheless, WD is sure that 90% of enterprise storage needs will still be served by HDDs in the next three years.

“Our expectation [is] that within three years [over 90% of] the traditional enterprise space would be serviced by 2.5” 10K [HDDs] and that our solution for higher-performance than that would be addressed with solid-state drives,” said Mr. Coyne.